Molly Smith opened Molly’s Cleaning Services on June 1. During the month of June

Question

Molly Smith opened Molly’s Cleaning Services on June 1. During the month of June, the following transactions were completed: June 1 Invested $15,000 cash in the business June 2 Purchased a ute for $10,500 + GST, paying $3,500 cash & the balance on account. June 4 Purchased cleaning supplies for $1,320 (inclusive of GST) on account June 8 Paid $1,800 cash on one year insurance policy effective June 1. (The amount includes GST of $60) June 13 Billed customers $3,520 for cleaning services (incl. of GST). Terms 2/10 net 30 June 20 Paid $1,600 cash on amount owed on truck & $550 on amount owed on cleaning supplies. June 21 Paid $1,850 cash for employee salaries. June 23 Collected $1,960 cash from customers billed on June 13. These customers had availed of the sales discount. June 27 Billed Customers $3,080 for cleaning services (incl. of GST). Terms 2/10 net 30. June 30 Paid gas & oil for the truck $165 inclusive of GST. June 30 Withdrew $850 for personal use. Note: Molly’s Cleaning Services is registered for GST. Required: a) Journalise the June transactions. (Marks: 8) b) Prepare a trial balance on a worksheet (Marks: 5.25) c) Enter the following adjustments on the work sheet & complete the worksheet. 1) Earned but unbilled revenue at June 30 was $950(excl. GST) 2) Depreciation on the truck for the month was $185 3) An inventory count showed $750 of the cleaning supplies were still on hand. 4) Accrued but unpaid employee wages were $550. 5) One month’s insurance expired.

Explanation / Answer

Date Account Particulars Debit Credit June 1 Cash - Dr 15000    Capital A/c 15000 (Being Invested $15,000 cash in the business ) June 2 Aute purchases - Dr 10500    To Cash 3500    To Accounts Payable 7000 (Being Purchased aute for $10,500 , paying $3,500 cash & the balance on account. ) June 4 Cleaning Supplies - Dr 1320    To Cash 1320 (Being Purchased cleaning supplies for $1,320 (inclusive of GST) on account ) June 8 Prepaid Insurance - Dr 1800    To Cash 1800 (Being Paid $1,800 cash on one year insurance policy effective June 1. ) June 13 Accounts Receivable - Dr 3520    To Revenue from cleaning services 3520 (Being Billed customers $3,520 for cleaning services (incl. of GST). Terms 2/10 net 30) June 20 Truck Expenses - Dr 1600    To Cash 1600 (Being Cash Paid to owned to truck) June 20 Cleaning Supplies - Dr 550    To Cash 550 (Being cleaning supplies purchased for $550) June 21 Salaries and Wages - Dr 1850    To Cash 1850 (Being Cash Paid for Employees salaries) June 23 Cash - Dr 1960    To Accounts Receivable 1960 (Being Cash collected from customers) June 27 Accounts Receivable - Dr 3080    To Revenue from cleaning services 3080 (Billed Customers $3,080 for cleaning services (incl. of GST). Terms 2/10 net 30.) June 30 Gas and Oil - Dr 165    To Cash 165 (Being paid gas & oil for the truck $165 inclusive of GST. ) June 30 Drawings - Dr 850    To Cash 850 (Being Withdrew $850 for personal use) Trial Balance as on June 30 Particulars Debit Credit Capital 0 15000 Cash 5325 0 Aute purchases 10500 0 Accounts Payable 0 7000 Cleaning Supplies 1870 0 Prepaid Insurance 1800 0 Accounts Receivable 4640 0 Revenue from cleaning services 0 6600 Salaries and Wages 1850 0 Gas and Oil 165 0 Drawings 850 0 Truck 1600 0 Total 28600 28600 Adjustment Entries 1) Earned but unbilled revenue at June 30 was $950 Unbilled Revenue - Dr 950     To Revenue from cleaning services 950 (Being Unbilled revenue accounted) 2) Depreciation on Truck - Dr 185    To Accumulated depreciation on Truck a/c 185 (Being depreciation on truck for the month of June) 3) Salaries and Wages - Dr 550    To Wages Payable 550 (Being wages accrued but not paid accounted) 4) Insurance - Dr (1800*1/12 months) 150    To Prepaid Insurance 150 (Being One month Insurance expired) Revised Trial Balance as on June 30 Particulars Debit Credit Capital 0 15000 Cash 5325 0 Aute purchases 10500 0 Accounts Payable 0 7000 Cleaning Supplies 1870 0 Prepaid Insurance 1650 0 Accounts Receivable 4640 0 Revenue from cleaning services 0 7550 Salaries and Wages 2400 0 Gas and Oil 165 0 Drawings 850 0 Truck 1600 0 Unbilled Revenue 950 0 Depreciation on Truck 185 0 Accumulated depreciation on Truck 0 185 Wages Payable 0 550 Insurance 150 Total 30285 30285

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